Buffett wrote to Berkshire Hathaway shareholders in 2013 that he and his longtime business partner Charlie Munger use basically the same approach in buying stocks that they do in acquiring entire companies. There are two steps to this process: 1. Estimate the company's earnings range for five or more years in the future. 2. Buy the stock if it's available at a reasonable price, relative to the lower end of the estimated earnings range. There's an important word that Buffett used with the first step in this process. He wrote that he and Munger had to determine if they could sensibly estimate a company's earnings. Eric’s comment What do you think? If you used earnings to look at the companies you invested, are they worth the price you purchased? While most people don’t have time to do an in-depth earnings forecast, you can at least choose companies that are profitable which makes them more resilient during a market crash